Expedia Travel CompanyTravel company Expedia
Unbelievably consolidated travel sector
You' ll be visiting three different travel agents (OTAs): Expedia, Orbitz, Travelocity. They are comparing fares between four cheap hotels: Day Inn, Howard Johnson, Super 8, Travelodge. They' re comparing rents at Hertz, Dollar, Thrifty. However, since you did not click on the "About" pages on these pages, you do not know that all makes in these four segments are affiliated with.
Indeed, the vast expanse of travel is much smaller than many users can imagine, with the recent consolidations in on-line travel. Prior to the literal inks on Expedia's purchase of Travelocity drying last months, Expedia recently declared its purchase of Orbitz for $1. 6 billion. Indeed, Expedia has been devouring other OTA' for 15 years, with about 80% of the US environment ruled by only two main players:
The Priceline Group. Unless Expedia purchases Priceline next months (or the other way around). Leaders in the travel and tourism industries, as well as financial and regulatory authorities, are discussing whether such consolidations will lead to sound tender. However, the actual issue is whether all this consolidating is helping or harming the consumer? What happens to travel on line is reflected in every branch of the business, and leaves travellers with ever-growing megacorporations behind.
In the last ten years, the US air carrier sector has experienced the most tragic consolidations in its entirety, left travellers behind with only three large operators - American, Delta and United. Business Travel Coalition President Kevin Mitchell states: "The majority of customers cannot have all their needs fulfilled by one of these companies.
" Incorporations of carriers differ from other travel mergers: Purchased brand companies are still active under their own name in other travel industries, but when carriers combine, the less strong name is abandoned and the company often closes air, air and hub operations. Trademarks are also removed in the case of reversal mark-ups, such as the merger of America West with US Airways (which then fused with American).
I have been very open about consolidating airlines in recent years; I spoke out in Congress for the consumer union when I spoke out against several mega-mergers. Let's look at a large US airfield with nine large rent brands: Actually, these nine marks only belong to three companies: This has been widespread in the liner shipping sector for many years, as have concern about such consolidations.
" This concern is focused on a few businesses that control a number of global makes, such as: It is the biggest travel market, with over a hundred makes and thousand homes, making it tough to compete. However, remember that only seven enterprises own more than 80 large marks. They are not in many cases directly competing, but in some cases they are:
Dwindling journeys on line? There are not as many OTA' s as many users believe. Egencia, CarRentals.com and Priceline own Priceline, Kayak and Booking.com. Charisse Jones noted that some tour operators are worried about an Expedia Orbitz wedding. As Cheryl Rosner, Chairwoman of both Expedia Corporate Travel and Hotels.com, says: "Whichever'showcase' a customer deals with, whether Expedia or Orbitz, the contents or the offer in terms of stock and prices will be the same.
" The irony is that a spokesperson for Air Lines for America, the industry's retail organisation, quotes a report that these takeovers "could reinforce Expedia's role in the supply chains and have an impact on customers, travel agencies and carriers. "This" do as we say, not as we do" policy is at odds with how the US air transport sector has vehemently opposed all of us who have been warning of the risks of consolidating, while the carriers have lobbied countless mio.
But are the airline companies all of a sudden concerned about the "effects of consolidating on the consumer and competition"? Expedia CFO Mark Okerstrom confirmed in a telephone call that his company is "relatively large" in the OTA sector, but added: "Overall, we are only a small company, and we think that our overall stake is single-digit.
" Obviously, this will be Expedia's policy if any authorities actually choose to appeal the merger: On-line travel is an $1. 3 trillion-industry, so why worry since no one company masters? Things that ignored this arguement is much of this vast industrial sector consists of separate brand websites held by airline companies, hotel companies, car hire companies, shipping companies, packers.
Experienced travel writer James Shillinglaw noticed the mere magnitude of on-line journeys - above all directly to the offerers - dwarves Expedia and Priceline, but in the third offerer sector Expedia is "now an even larger colossus than it already was. The competition would be expected to cry most loudly, but last weekend the Priceline chief executive explained:
"I' m not seeing the deals Expedia made as a bad thing for our group. "Mitchell has voiced his opposition to the airlines' consolidations, but has supported Expedia-Orbitz and claims: "It is not always the number of players that make a particular segment functional or not. "He quotes the strong rivalry between the aircraft manufacturers Boeing and Airbus and explains: "In my opinion, this Expedia Orbitz deployment is competitively and consumer-friendly.....
Powerful, impartial vendors are necessary to keep the airline industry sincere on their sites and in their consumer services. "Are there any remaining consumer benefit from tour operators joining forces? A number of respondents claim that consolidating will generate higher-yielding businesses, and some suggest greater monetary advantages - such as higher spending powers - that will bring greater advantages to travellers.
However, there is a long story of customers who do not benefit from M&A. The entanglement of competitors may help the mother company, but it is weakening the market for the consumer. A contributor to Consumer Reports and former publisher of Consumer Reports Travel Letter, Bill McGee is an FAA licenced airplane dispatch specialist who has worked in flight operation and managment for several years.